Lean Manufacturing along the Supply Chain

efficient implementation at a global operating

automotive supplier

Klaus Gnther, Senior Manager Group Logistics

GRAMMER Milestones

GRAMMERs success started more than 100 years before when Willibald
Grammer founded a saddlery in Amberg. Since then GRAMMER developed itself
from a local manufacturer of seat cushions to a global automotive supplier for the
car and commercial vehicle industry.
1880 Willibald Grammer establishes a saddlery
1954 Georg Grammer produces seat cushions for tractors
1970 Serial production of suspended seats
1982 Production of seats for trucks and busses
1985 Division automotive interior
1990 Production of passenger seats for trains (ICE)
1996 IPO of GRAMMER AG
2004 Development and production of center consoles
2005 Opening of two new production sites in China
2008 Entering the Russian truck market
2011 Takeover of EiA Electronics N.V., Belgium
2012 Joint Venture for truck seats with Yuhua in China
2013 Takeover of Nectec s.r.o., Czech Republic
GRAMMER Globally next door to the customer

As a global player in the passenger car and commercial vehicle industry we are
located on four continents with 26 companies and more than 30 production and
sales/distribution facilities focused on highest quality.
GRAMMER products and markets

Driver seats for tractors, construction vehicles, forklifts and municipal vehicles
GRAMMER products and markets

Driver seats for trucks and buses; seating systems for passenger seats
GRAMMER products and markets

Headrests, armrests and center Consoles for passenger cars

1 Motivation and initial situation

2 Supply chain with lean principle

3 Process and application overview

4 Functional details

5 Lean-capable supply network

1 Motivation and initial situation

2 Supply chain with lean principle

3 Process and application overview

4 Functional details

5 Lean-capable supply network

Without levelling in production each single demand variation has
a direct impact on the production and supply network

Production plant
OEM
Components 1

Assembly line Challenges today

JIS plant
Components 2 Disturbances initiate a shock
Low-Runner wave in planning
Event-driven plan: distur-
bance, planning, disturbance
Continuous replannig leads to
instable production program
Changing sequences disable
IC plant IC plant
optimisation
Missing transparency
Ongoing coordination of
Supplier A Supplier B Supplier A involved persons is required

A stable planning and according processes are a prerequisite for levelling in production,
replenishment and procurement processes
LEAN Production and SAP a contradiction?

General question before the LEAN implementation

LEAN and SAP???

Interface to SAP ERP?

IT application support vs. IT-free processes (Kanban, Heijunka)

If supported by IT: standard solution/software or individual development?

Central data access: transparency vs. local and IT-free processes?

* Every Part Every Interval

Benefits of Lean Manufacturing in the supply chain

Quick response on demand variations / faster reaction on market development

Complexity of processes is reduced
Processes are standardised
Increase of quality in operations and logistics
Stock level reduction
Manufacturing processes are decoupled from exceptional events
Number of utilised resources is optimised
Motivation of employees is increased / absence times are reduced
1 Motivation and initial situation

2 Supply chain with lean principle

3 Process and application overview

4 Functional details

5 Lean-capable supply network

Supply Chain with lean principles
Define /
KANBAN
simulate Alignment Heijunka
calculation
schedule

Production plant Supplier park

Components 1
Assembly line 1
JIS plant OEM
push JIS
pull

Components 2 Assembly line 2

Low Runner JIS plant OEM
super- push JIS
Demand-
driven push market

Goods receipt

Calculation of
Pull safety stock

IC plant IC plant External

supplier
1 Motivation and initial situation

2 Supply chain with lean principle

3 Process and application overview

4 Functional details

5 Lean-capable supply network

Process steps of the Heijunka levelled Kanban system

Material require- Short-term Production and re-

Master data maintenance for alignment/levelling
ments planning planning plenishment control

Segmen- EPEI Define Simulate Calculate

Alignment Levelling Pull
tation calculation schedule schedule safety stock

Segmentation: Calculate safety stock:

Identification of material groups with Definition of the safety stock levels
individual planning processes and based on number of Kanban boxes
requirements (e.g. differentiation of high Alignment:
runners and low runners) constant production quantities within
EPEI calculation: planning interval as result of MRP
Determination of the minimal lot size Levelling:
Define schedule: Creation of the production sequence
Specification of time intervals for the pre- according to defined schedule
definition of the production sequence Pull:
Simulate schedule: Replenishment of components
Align schedule and actual production plan according to the real consumption
Process steps and elements of the
Heijunka levelled Kanban system

Material require- Short-term Production and re-

Master data maintenance for alignment/levelling
ments planning planning plenishment control

Segmen- EPEI Define Simulate Calculate

Alignment Levelling Pull
tation calculation schedule schedule safety stock

Supported by SAP Enhancement Packages Supported by Consulting Solution

Enhancement Package 6 is available Available since Q3/2011 as consulting

The functionality Enhanced Lean solution Lean Manufacturing Planning &
Manufacturing in EhP5 replaces SAP LPO Control (Heijunka) by SAP Consulting
SAP extended the lean manufacturing
capabilities of SAP ERP (EhP2, EhP4,
EhP5, EhP6) continuously
Lean & SAP two different worlds?

SAPs understanding of Heijunka and an adequate IT-solution:

system integrated leveling keeps demand fluctuations from shop floor to enable a more
efficient production process
there are high- and low runners, and production needs to be mixed
different kinds of leveling have to be supported: Push, Push-Pull and Pull-Leveling
Heijunka needs a good visualization

SAP and Lean is not a contradiction, its the combination of the benefits of PUSH & PULL:
SAP covers both approaches, PUSH and PULL
PUSH is the classic planning approach, which is performed mainly by MRP
PULL means consumption based replenishment of goods, and is covered by ERP
processes like JIT, JIS and Kanban
Both approaches can be combined in SAP, so that the long-term planning view can be
improved by short-term consumption information

SAPs consulting solution Lean Manufacturing Planning & Control supports a fully
integrated, IT supported Heijunka process.
System-based leveling with SAP LMPC

Initial Situation:

materials
requirements
fluctuate over
time

but efficient
manufacturing
needs steady
quantities

Solution:
demand fluctuations are covered by a buffer; buffer size is calculated according to fluctuations size
and service level required
goods are produced in leveled, steady quantities, filling the buffer
all calculations are performed by the system; manual interaction needed only in case of exceptions
many other leveling variants possible (e.g. Pull / Push-Pull), depending on requirements
Heijunka-Board the electronic way:
graphical planning table with SAP LMPC add-on
production orders with e.g. leveled quantities can be displayed, sequenced etc.
rhythm wheel / production schedule functionality can be used
mixed sequence of high / low runners
direct access to relevant data
conflicts (e.g. missing components, tools, etc.) can be visualized
solution combines the features of a Heijunka-board, combined with the comfort of a planning cockpit
Capacity
view

Stock level
view
Visualization
of order
sequence

flexible &
adjustable
menus and
buttons
Alerts, e.g. for
buffer level,
constraints not met,
etc.
Sequencing
according to
different
criteria (e.g.
setup matrix)
Alle relevant data
available (> 900
columns in ALV-
Grid)
1 Motivation and initial situation

2 Supply chain with lean principle

3 Process and application overview

4 Functional details

5 Lean-capable supply network

Functional system support
segmentation is a prerequisite for optimised Heijunka planning
Material require- Short-term Production and re-
Master data maintenance for alignment/levelling
ments planning planning plenishment control

Segmen- EPEI Define Simulate Calculate

Alignment Levelling Pull
tation calculation schedule schedule safety stock

Segmentation

Product related analysis Support during determination of

Variation of overall demand EPEI
Average volume Safety stock
Product min/max demand Stock to cover increasing
demand
Value/benefit contribution

With consideration of
Analysis of available capacity
OEE-Influence, pre-setup
Asset utilisation
Reserve capacities
Disturbances
Setup changes
Cycle time Stock areas, box sizes and
Operating times box availabilities
Maintenance Operating times
EPEI classes
Master data maintenance alignment/levelling:
Principe of the EPEI calculation
Material require- Short-term Production and re-
Master data maintenance for alignment/levelling
ments planning planning plenishment control

Segmen- EPEI Define Simulate Calculate

Alignment Levelling Pull
tation calculation schedule schedule safety stock

EPEI calculation

Overall shift duration

Production duration Stop time Shift decoupling Setup time

Based on demand
forecast and output Based on statistical Establishing of a Usage of the
rate for the whole reports of shift shift decoupling residual available
product portfolio per protocols (average covering 80% of time per shift for
shift (incl. Scrap) values) occurred stop times setup

Determination of EPEI, lot size and target stock levels

Master data maintenance for alignment/levelling
EPEI calculation
Material require- Short-term Production and re-
Master data maintenance for alignment/levelling
ments planning planning plenishment control

Segmen- EPEI Define Simulate Calculate

Alignment Levelling Pull
tation calculation schedule schedule safety stock

EPEI calculation

EPEI is the shortest time

interval, where each product is
produced at least once
EPEI is the operational smallest
lot size in contradiction to the
economic lot size
Target is the standardised
process for the determination of
the moving stock
Master data maintenance for alignment/levelling
Calculate safety stock
Material require- Short-term Production and re-
Master data maintenance for alignment/levelling
ments planning planning plenishment control

Segmen- EPEI Define Simulate Calculate

Alignment Levelling Pull
tation calculation schedule schedule safety stock

Calculate safety stock

Average demand
Replenishment, consumption

SAP enhancement package 5:

Improved support to calculate
safety stock
SAP ERP proposes the number
of Kanban boxes Stock variation

Periodic process to update the

parameter settings
Customer demand or a specific
forecast can be used for
calculation
Less gap of material with Disturbances, buffer Operating time

reduced stock level

Requirements planning:
Alignment
Material require- Short-term Production and re-
Master data maintenance for alignment/levelling
ments planning planning plenishment control

Segmen- EPEI Define Simulate Calculate

Alignment Levelling Pull
tation calculation schedule schedule safety stock

Alignment

Alignment for each

production line after
MRP run for high
runner
Production capacity is
adapted to alignment
Customer specific
implementation is
possible
Daily production
quantities basis for
sequencing
Planning of low
runners by date
Production and replenishment control:
Pull
Material require- Short-term Production and re-
Master data maintenance for alignment/levelling
ments planning planning plenishment control

Segmen- EPEI Define Simulate Calculate

Alignment Levelling Pull
tation calculation schedule schedule safety stock

Pull
Consumption plant
Manufacturing:
Release 2 of the consulting solution
supports the Heijunka aligned Kanban
system with shop stock
Replenishment:
MRP generates the demand forecast
Kanban-/JIT-calls support pull-based
replenishment from production,
storage and the supplier
Kanban board with automatic update
Batch building box
Production and replenishment control: Pull
Supplier KANBAN: control cycle calculation
Material require- Short-term Production and re-
Master data maintenance for alignment/levelling
ments planning planning plenishment control

Segmen- EPEI Define Simulate Calculate

Alignment Levelling Pull
tation calculation schedule schedule safety stock

SAP Enhancement Package 5:

Graphical display of demand
and the calculated stock level in
the supermarket
Calculation of the number of
Kanban boxes within the control
cycle
Production and replenishment control: Pull
Supplier KANBAN board: consumer view
Segmen- EPEI Define Simulate Calculate
Alignment Levelling Pull
tation calculation schedule schedule safety stock

Features: Consumer
Empty KANBANs already
assigned to the supplying plant
are marked in red
Full KANBANs in the
supermarket of the consuming
plant are marked in green
KANBANs in transit with delive-
ry note are marked in yellow
JIT call via SAP standard Source
Display:
Schedule line ID (customer)
Box number of customer
Processing status in supplying
plant
Planned delivery time
Benefits through a lean oriented supply chain

Levelled production and material flow

Peaks on capacity requirements on people and machines are reduced
Bullwhip effect especially to intercompany suppliers is reduced
Continuous customer delivery is improved
Stable consumption of supplier parts (internally/externally) is ensured
Less impact of variances in sales quantities and disturbances to the production plan
Lead time and stock level are reduced
Integration of shop floor and SAP supported material requirements planning and procurement
processes
Simplification of the planning process with reduced planning effort
Transports and their capacity is easier to plan
Stock level planning is optimised: buffer stock is reduced Stock areas get smaller costs
of stock keeping are reduced
Lean: Processes and IT are aligned to an efficient flow

Lean processes Segmen- EPEI Define Simulate Calculate

Alignment Levelling Pull
In SAP ERP tation calculation schedule schedule safety stock

Operational lean processes supported by SAP ERP

Supplier park
Pull
Production 1
Assembly line 1
Define/simulate Levelling
schedule JIS plant OEM
push JIS
pull
Calculate Alignment
safety stock
Production 2 Assembly line 2
JIS plant OEM
Low -Runner Super- push JIS
push market Calculate
safety stock

Goods receipt Production plant

Segmen- EPEI
tation calculation

Pull The transfer of the processes to SAP ERP avoids

IC plant IC plant External disruptions and increases the positive effect of levelling
supplier in production with impact on the whole supply chain
1 Motivation and initial situation

2 Supply chain with lean principle

3 Process and application overview

4 Functional details

5 Lean-capable supply network

Lean & Levelling, but when?
Process oriented
Demand is in principle continuously, a preview is available
Stable processes and a stable bottleneck (maybe challenges during ramp-up/phase-out)
Straight oriented material flow
Partners and involved departments are able to adapt to levelled requirements and delivery
Short term additional demands can even though be covered
Combined planning of high runners with levelling and low runners by requirement date
Relatively short setup times

IT oriented
SAP SCM is too complex (heuristic with characteristic based or model mix planning)
Standard capacity levelling in SAP ERP (graphical planning table) has gap of transparency
Infinite planning is too less ( finite planning with Heijunka board is required)